1 person commented on "What the Rich Get Out of Debt Relief

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Rahul Mahajan
Submitted on 21 June 2005 at 8:47 am

1. Argentina’s successful reassertion of the right of sovereign default has presumably sent shock-waves through the international finance community.

2. Initial U.S. crusading against Iraq’s “odious debt” reopened a space for serious discussion of the concept (and of U.S. hypocrisy). — maybe

3. Debt-servicing is growing increasingly onerous, not to say impossible, thus increasing the temptation to default. With Argentina’s example before them, many leaders might convert the occasion of default from economic failure to a potent declaration of political principle, possibly much to be appreciated by the poor masses who have been forced to pay user fees for education and denied health care because of debt servicing.

4. Acting preemptively to “forgive” debt allows the imposition of conditionalities and, as you say, the assertion of control by the rich just at the time assertions of independence by the poor are becoming most likely.

Above and beyond all that, there has been a change in the global discourse that, perhaps a bit arbitrarily, we can date to roughly the April 16, 2000 protests in DC against the IMF and WB (although, of course, the work done to build to that point by institutions in the Global South long predates it).

Unbending adherence to debt servicing even for poor and AIDS-ridden countries has now become a threat to the legitimacy of the global capitalist system — and when a system starts to lose legitimacy, change can usually not be stopped purely by coercion. Similarly, the militant rhetorical unconcern for the poor of the 1980’s and 1990’s cannot now be continued for the same reasons.

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